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Skype Hits One Million Paid Users

Amazingly Skype sets new records almost daily. Here is my recent interview with Skype’s Niklas Zennström. Now this… Skype hits one million paid users! More amazingly there are 155,000 users per day. Here is the full release.

Skype Hits One Million SkypeOut Users

March 11, 2005 - As of today, more than 1,000,000 users enjoyed the benefits of SkypeOut, Skype's first premium service offering global calling to PSTN numbers for local rates. Skype is the leading VOIP-category product, worldwide.

"We're thrilled about Skype's growth and credit support from users who have told their friends and family about the cost and quality gains they've found with Skype," said CEO and co-founder Niklas Zennström, speaking from the CeBIT tradeshow in Hanover, Germany. "Our one million SkypeOut users prove that savvy consumers will pay for value - and we will continue to delight users by delivering the software and services they seek to realize the potential of modern communications."

This milestone is the most recent achievement for the fastest-growing global communications tool in history. Skype has more than 29 million registered users and is adding more than 155,000 new users per day. On average, 2 million people are simultaneously using Skype to connect with friends, family members and colleagues. Skypers have now talked for approx six billion minutes. (Note "minutes served" is tracked on the main Skype.com homepage and will likely hit 6 billion later today.)

Skype is constantly innovating and setting new standards of quality and value for Internet Telephony. Skype has stated commitments to expanding platforms beyond the MAC, Linux, Windows and Pocket PC platforms currently available, and is making massive inroads in implementing our wireless strategy to expand portability. In the near future, Skype will announce new premium offerings, and enhancements to the basic free service.

Skype's award-winning software has been honored by numerous organizations. A complete listing of Skype's awards is available at www.skype.com/company/awards/.

Please let us know if you have questions or would like any additional information.

Thank you for your interest in Skype and your support over the last year and a half.

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VoIP 2.0 is Happening

Having attended a whirlwind four tradeshows in six weeks I have never been more excited about the future of VoIP -- It's VoIP 2.0. The market is growing so quickly and there are dozens of new product categories and paradigms popping up all the time. Disruptive technologies like VoIP allow markets to go in new directions that aren’t always obvious. I am excited like never before about TMC conferences in general.

Conferees tell me TMC has the best conference offering show after show. In fact I heard this ten times in the last week. Everyone is stopping me and telling me how they look forward to future TMC events.

We took a big chance with this last ITEXPO in Miami. We offered a refund on our conference (Details are on www.itexpo.com site). This is the first time we ever did something like this and we didn’t know what to expect. Out of hundreds and hundreds of conferees that attended the show, we didn’t have a single person apply for the refund. Not one! Hats off to my speakers and the TMC team for pulling off what was  a great conference by all accounts.

As I write this I am preparing for The Huge ITEXPO in LA, October 24-27, 2005. If you think Miami was good -- the industry can't stop talking about it... Wait till you see what we do in LA. It will be spectacular!

Don't forget that in the mean time, Speech-World and IP-Contact Center Summit are around the corner and will take place this May 24-26, 2005 in Dallas. I can't wait for this event. It is our FIRST speech show and so far the attendees are the top names you would want to attract to such conference. We have huge call centers, service providers and OEMs signing up in good numbers.

VoIP Developer is August 2-3, 2005 and was launched it to fill a void. There was a desperate need for an event focused exclusively on developers and partnering. Nothing else. Exhibitors begged me to do it and the last one we did in San Jose in 2004 was tremendous hit. We expect attendance to double to 1,000 this year and we expect the hall to double and sell out again!

If you are in the industry you need to get a hold of Dave Rodriguez asap if you want to submit an abstract to speak (for VoIP Developer or ITEXPO). I predict we will get around 1,500-2,500 responses to the call for papers for our events this year (Speech-World is already filled with speakers). Remember that we want speakers that are non-commercial. You should speak at a TMC event if you are passionate about educating an audience. Please don’t put your logo on you slides. Please don't plug your company. You are there to educate. You can send conferees in your session to the exhibit hall if you want to sell something. If you educate them objectively, they will be more likely to consider purchasing from you. I know from decades of experiences in running telecom conferences that commercialism only serves to upset an audience. It decreases the likelihood of purchasing from your company.

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Adtran NetVanta

Adtran was synonymous with the CSU/DSU market and in fact they had a virtual monopoly on the space for years. As markets change however companies need to evolve and as the CSU/DSU market slowly eroded, Adtran looked to other areas in which to thrive.

One of these areas it turns out is VoIP. Adtran has a number of products that complement IP PBXes nicely -- their NetVanta series 1000 managed layer 2 Ethernet switches. These devices come in a number of flavors and sizes and can be purchased directly by an enterprise or by service providers for resale. One is sure to suit the palette of your IT department. The Netvanta 1224STRPoE is a great product because it is a switch, a router, and has power over Ethernet known as 802.3af. It’s a non-blocking switch, has 24 ports of fast Ethernet interfaces. It's 1U in size, rackmountable and of course 19". The price is a surprise. Surprisingly low that is. It lists for $2,295. Take away POE and the price drops $1k. The warranty is five years and the software upgrades are free for life. The company is almost giving these products away but when you compete with Cisco and more recently Dell you need to differentiate yourself and Adtran seems to be doing a good job of this.

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Teleo Crash

I've written about Teleo before. Rumor has it they had 7,000 downloads of their software soon after they launched. They had to shut down and will soon reopen the servers with the ability to handle the unexpectedly large demand.

Take a look here for details.

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Powell Joins Aspen Institute

FCC CHAIRMAN MICHAEL K. POWELL TO JOIN ASPEN INSTITUTE

Washington, DC, March 11, 2005-The Aspen Institute announced today that Michael K. Powell, outgoing chairman of the Federal Communications Commission (FCC), is to become senior fellow of the Aspen Institute Communications and Society Program for a three-month period effective upon his departure from the FCC. Powell, who was honored last year by the Institute with the Henry Crown Leadership Award, is the third consecutive FCC Chairman to join the Aspen Institute following his chairmanship. He will advise the Communications and Society Program on leadership, communications policy, and program activities and operations. Judith Mann will also move from the FCC to the Institute as Powell’s confidential assistant.

“Michael Powell exemplifies the type of leader that the Aspen Institute seeks to attract to our various program and leadership activities,” said Walter Isaacson, President and CEO of the Aspen Institute in announcing the appointment.  “He will add an important perspective to planning our non-partisan forums in communications and information policy – and beyond.”

Shortly after announcing his departure from the FCC, Powell noted: “The Aspen Institute has been an important part of my life, both in its influential communications policy work and in the Crown leadership program.  I look forward to serving as an adviser to this distinguished organization.  I am also grateful for the opportunity to take some time to think about the future.”

Charles M. Firestone, executive director of the Institute’s Communications and Society Program, welcomed Powell’s appointment: “Michael Powell has been an excellent participant in Aspen Institute forums for many years, both as commissioner and as chairman of the FCC.  We are fortunate to have the benefit of his advice and insights in developing new activities and in reinvigorating our ongoing projects.”

Mr. Powell can be reached through his confidential assistant, Judy Mann at judy.mann@aspeninstitute.org or 202-736-1492.

The Aspen Institute Communications and Society Program, one of 18 policy programs at the Institute, convenes non-partisan roundtable forums for leaders and experts to address the foremost policy challenges facing societies around the world as a result of the communications and information revolutions. Through its forum activities and reports, it develops new models and options for policies in the telecommunications, new media, and Internet worlds.
It is also a venue where veteran and emerging decision-makers from government, business, media, labor, consumer and the non-profit sectors can explore new concepts, find personal growth and insight, and develop new, diverse networks for the betterment of the policymaking process and society.  The program is based in the Institute’s Washington, DC office.

Ongoing activities of the Communications and Society Program include a CEO-level Forum on Communications and Society, the annual Aspen Conference on Telecommunications Policy, the Roundtable on Spectrum Policy, the Aspen Institute Roundtable on Information Technology, and a number of conferences on journalism and freedom of expression.

The Aspen Institute, founded in 1950, is an international nonprofit dedicated to fostering enlightened leadership and open-minded dialogue.
Through seminars, policy programs, conferences and leadership development initiatives, the Institute and its international partners seek to promote nonpartisan inquiry and an appreciation for timeless values. The Institute is headquartered in Washington, D.C., and has campuses in Aspen, Colorado, and on the Wye River on Maryland's Eastern Shore. Its international network includes partner Aspen Institutes in Berlin, Rome, Lyon, Tokyo, and New Delhi, and leadership programs in Africa and Central America.

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Website Slammed

In the ongoing saga of ever-increasing traffic, we are upgrading our server yet again. If you can believe it, TMCnet now ranks in the top 7,000 sites in the world. Thanks for being part of our amazing growth. Hopefully the new server will be in place on Monday. It is a monster… More like a minicomputer than a PC based server.

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SEC Vs. Nacchio

The WSJ reports civil charges are about to be filed against Quest’s Joe Nacchio the former CEO. The charges are expected to be cooking the books otherwise known as fraud. The area of interest is “capacity sales,” that Nacchio has said in the past are legit while the SEC says they were “Sham transactions.” We’ll have to see who wins.

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Andy on Shows

Andy Abramson is right on. There is no room in the industry at VoiceCon, Comptel, SuperComm, VON or ITEXPO for companies that feed of a show and contribute nothing back. This applies to all events. It isn’t fair to anyone for them to exist and I request not to be contacted by companies that don’t exhibit or sponsor the event I attend.

COMDEX is dead in part because this got out of hand. Exhibitor support faded and the show suffocated. I think the tech industry is worse off because of it.

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VoIP not Parasitic

I hear often that many of today’s VoIP providers are parasitic and I take offense at the term as I believe a parasite is an organism that feeds off a host and offers no benefit. Here is what the good people at Merriam-Webster have to say about the definition of a parasite:

Pronunciation: 'par-&-"sIt
Function: noun
Etymology: Middle French, from Latin parasitus, from Greek parasitos, from para- + sitos grain, food

Something that resembles a biological parasite in dependence on something else for existence or support without making a useful or adequate return

Is this accurate? I know many people that have gotten broadband so they could use VoIP.

For those of you who are biology majors, don’t you agree that symbiotic is a better term for VoIP providers?

Here is what Webster says about the term symbiosis:

Pronunciation: "sim-bE-'O-s&s, -"bI-
Function: noun
Inflected Form(s): plural sym·bi·o·ses /-"sEz/
Etymology: New Latin, from German Symbiose, from Greek symbiOsis state of living together, from symbioun to live together, from symbios living together, from syn- + bios life -- more at QUICK

1 : the living together in more or less intimate association or close union of two dissimilar organisms
2 : the intimate living together of two dissimilar organisms in a mutually beneficial relationship; especially : MUTUALISM
3 : a cooperative relationship (as between two persons or groups) <the symbiosis... between the resident population and the immigrants -- John Geipel>

Notice how in this term there is a relationship where both parties benefit. Symbiosis also goes over better at cocktail parties.

Example:

I’ll have a light beer, thanks for asking. So what do you do anyway?

I work for a VoIP provider.

Oh, really? What is that?

Well you what broadband is don’t you?

Sure.

You know what a deer tick is don’t you?

Sure.

Well we are the deer ticks of broadband.

Cheers.

It is important to look at VoIP in the correct light. We are as beneficial to broadband providers as they are to us. Some people just want to use Vonage or Packet8 or whatever. They don’t want Cablevision’s Optimum Voice. They need the broadband access and a VoIP provider to achieve an adequate solution. In

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Vertical

I recently met with Vertical's Bill Tauscher recently. You may recall I interviewed Bill Tauscher a while back. He gave a great presentation as a keynoter at ITEXPO in Miami a few weeks back and I am always impressed with his passion for the business. Bill was telling me about how he purchased Vertical Networks and the process of talking with other PBX companies in the space before making the acquisition. There are a handful of PBX companies around the 50 million dollar in revenue range as he points out. Putting together Vertical Networks and Artisoft into a new company named Vertical allows them to move up a rung on the ladder in terms of size and capability. I expect to see lots of great news from this new company.

Bill tells me business is booming. One of the reasons is the focus they've placed on automating retailers such as CVS, a major Vertical customer. You see companies in the retail market have pain and lots of it. They have centralized call centers as well as local branch telephones. In many cases these local branches have atrocious call abandonment levels and worse yet there is no way to measure or monitor what is going on at the branches in a cost effective way. Enter Vertical with a solution that is tailor made for such situations.

An interesting side note, Vertical is also behind the recent story floating around the web of McDonalds automating its drive troughs into centralized ordering centers. I am told McDonalds locations that have centralized ordering average 20-30 cents more per order than their typical counterparts. Another benefit of this concept is that they are able to handle more customers since the drive-through lines are now smaller.

Moreover, Vertical was a visionary in developing their distribution channel. They inked deals with Fujitsu and IBM early on and these companies quickly legitimized Vertical as a player allowing their products to easily be sold in companies that may be hesitant to deal with a smaller player directly.

The Vertical story shows me that companies can sell an IP-PBX and become super-successful because they choose a niche and think outside the box. If you sell IP PBXs and concentrate on cost alone you are dead IMO. Business is all about differentiation. Every category becomes commoditized over time. As Nadji Tehrani, TMC's CEO has espoused for years. Pick a Niche, stick to it. Focus on it and position yourself as a leader in your space. The riches will soon follow (OK this last sentence is my addition. Then again, it's my blog so I reserve the right to improve things :-)

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Aspect and Asterisk

Many of you have witnessed me debating Mark Spencer of Digium onstage at ITEXPOs over the years. It's always a fun debate/discussion and from what the audience shares with me, our sessions are very educational. Amazingly, Mark launched Asterisk, the open-source PBX but that wasn't his initial intent. He started his company to support Linux systems. He wasn't planning on going down the telephony or VoIP path from the start but as he was looking for a new phone system for his office, he couldn't find one that was cost-effective. He decided to build one himself and the rest is history.

Commercial companies generally bash open-source as these products in any market reduce margins for commercial players. Of course open-source isn't for everyone and not every company who goes down the open source path stays true to this route. Some decide to switch to commercial software later for a variety of reasons.

For this reason it is big news that Aspect, a leader in ACDs decided to test interoperability between their Uniphi suite and Asterisk over SIP. Aspect has always been ahead of the technology curve when it comes to ACDs. They embraced VoIP early on and are now embracing open-source.

Aspect execs were very candid with me. They told me their customers are looking for this sort of connectivity. They believe smaller companies would be more likely than large to tinker with open-source but in the end as they point out, it is up to the customer to decide what they want.

In my candid conversations, I could read on the faces of Aspect execs, "Did we let the genie out of the bottle?" I too wonder about this. Is open source connectivity a good thing or bad when you have to answer to shareholders? In the long run will Aspect sell more products or less? Will open source fever sweep the contact center software community now that Aspect has legitimized Asterisk in the contact center?

We will have to see how this plays out but in the mean time I personally commend Aspect for taking this leap to bridge the world of VoIP, open source and contact centers.

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Merril Lynch on Wireless

Yet another Merrill Lynch research report. Hey, where were these guys in 2002? Either telecom is hot or covering oil companies is just plain boring ;-)

Telecomm: Conference Highlights - USA


On March 7-9, Merrill Lynch hosted its Communications Forum in Dallas, with over 40 telecom services and equipment companies. Key takeaways from the conference included: confirmation of our view that wireless growth remains solid, the equipment provider implications of FTTx and HSDPA rollouts, that handset inventory is above Qualcomm's desired level, and that the status quo remains likely for the telecom regulatory environment in the intermediate term.

First, we think that underlying wireless growth remains solid, within the context of an improving market structure. Relative pricing stability has emerged as a theme, following a fairly benign holiday promotional season. During 1Q 05, Cingular raised the entry point on family plans and T-Mobile USA ended a promotion. Further, we believe that the actual implementation of Cingular's system migrations will start later in 2005 and continue into 2006. Therefore, the migration of AT&T Wireless customers is currently occurring "naturally" as customers change plans. We believe that the potential disruption associated with forced migrations could be some time off. On the themes of wireless, valuation and long-term strategic position, we maintain our Buy ratings on Sprint (FON, C-1-7, $23.34) and ALLTEL (AT, C-1-7, $56.60).

Second, the divergence with regard to fiber overbuild strategies was highlighted by SBC and Verizon. In our view, the divergence relates to cost and speed of deployment versus bandwidth, along with the condition of the existing plant.

Third, our sessions with Nortel focused on the theme of wireless broadband and 3.5G, with HSDPA now expected to fulfill the promise to operators of 1-4 Mbps. Nortel contends that existing first generation UMTS base stations may not be able to fulfill the power requirements for optimal HSDPA performance. Nortel believes it delivers a performance advantage and argues the opportunity for it to take share exists. This will no doubt continue to be debated among the large equipment providers with actual share implications unfolding in contract announcements and roll outs.

Fourth, per Qualcomm's presentation, the current handset inventory seems to be above the desired level of 18 weeks. We have reduced our June quarter EPS forecast from $0.30 to $0.29.

Fifth, our telecom regulatory panel discussions indicated that merger approvals are likely without significant concessions, that intercarrier compensation and USF changes will take time, and that TV franchising authority will stay at the local level. With regard to the RLECs and managing regulatory risk, we think that carriers can more likely influence matters at the state (rather than federal) level. This could be a relative advantage for some, such a Neutral rated Iowa Telecom (IWA, C-2-7, $19.96).

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Merril Lynch on Wireless

Yet another Merrill Lynch research report. Hey, where were these guys in 2002? Either telecom is hot or covering oil companies is just plain boring ;-)

Telecomm: Conference Highlights - USA


On March 7-9, Merrill Lynch hosted its Communications Forum in Dallas, with over 40 telecom services and equipment companies. Key takeaways from the conference included: confirmation of our view that wireless growth remains solid, the equipment provider implications of FTTx and HSDPA rollouts, that handset inventory is above Qualcomm's desired level, and that the status quo remains likely for the telecom regulatory environment in the intermediate term.

First, we think that underlying wireless growth remains solid, within the context of an improving market structure. Relative pricing stability has emerged as a theme, following a fairly benign holiday promotional season. During 1Q 05, Cingular raised the entry point on family plans and T-Mobile USA ended a promotion. Further, we believe that the actual implementation of Cingular's system migrations will start later in 2005 and continue into 2006. Therefore, the migration of AT&T Wireless customers is currently occurring "naturally" as customers change plans. We believe that the potential disruption associated with forced migrations could be some time off. On the themes of wireless, valuation and long-term strategic position, we maintain our Buy ratings on Sprint (FON, C-1-7, $23.34) and ALLTEL (AT, C-1-7, $56.60).

Second, the divergence with regard to fiber overbuild strategies was highlighted by SBC and Verizon. In our view, the divergence relates to cost and speed of deployment versus bandwidth, along with the condition of the existing plant.

Third, our sessions with Nortel focused on the theme of wireless broadband and 3.5G, with HSDPA now expected to fulfill the promise to operators of 1-4 Mbps. Nortel contends that existing first generation UMTS base stations may not be able to fulfill the power requirements for optimal HSDPA performance. Nortel believes it delivers a performance advantage and argues the opportunity for it to take share exists. This will no doubt continue to be debated among the large equipment providers with actual share implications unfolding in contract announcements and roll outs.

Fourth, per Qualcomm's presentation, the current handset inventory seems to be above the desired level of 18 weeks. We have reduced our June quarter EPS forecast from $0.30 to $0.29.

Fifth, our telecom regulatory panel discussions indicated that merger approvals are likely without significant concessions, that intercarrier compensation and USF changes will take time, and that TV franchising authority will stay at the local level. With regard to the RLECs and managing regulatory risk, we think that carriers can more likely influence matters at the state (rather than federal) level. This could be a relative advantage for some, such a Neutral rated Iowa Telecom (IWA, C-2-7, $19.96).

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WiMAX in Japan

Can someone please bring WiMAX to the US? I am sick and tired of lagging in broadband technology. Shouldn’t the US be leaders in broadband? China, India and now Japan seem to be leading the way . Funny thing is, I think the demand and real need for this technology could be greater in the US!

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ITEXPO Criticism

This is worth passing along because it is just so funny. A vendor came to our last ITEXPO in Miami to evaluate it and sent us this e-mail:

I did attend the show. I was impressed by the people attending.

To be honest, I thought that the expo was a bit crowded. However, everyone I spoke to that was exhibiting was very pleased.

This criticism is the best praise that can be bestowed on any event. Thanks to all of you that came to the show and made it such a success!

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Wireline Shakeup

Here are some excerpts from a Merrill Lynch report.

Telecom Equip-Wireline: Vendor Shakeup Likely in Next 12-18 Months

• Verizon FTTP Evolution Could Challenge Tellabs, Ciena (Incumbents) in 2006

• Verizon outlined its Fiber to the Premises (FTTP) network evolution plans at the Merrill Lynch Communications Forum held earlier this week in Dallas. Similar to SBC and BellSouth, Verizon plans to adopt the IPTV standard to offer advanced video services in mid to late 2006. We believe the move to IPTV would require new equipment, thereby challenging the incumbency of current vendors, primarily Tellabs (AFC) and Ciena, who have ATM-based equipment. However, we do not expect any near-term impact on either Tellabs or Ciena and note they have adequate time to react, given Verizon's upgrade plans are 9-12 months away.

• Vendor Shake-up Looming in Technology Migration

• In order to support IPTV services and higher speeds, Verizon plans to adopt a new technology called GPON, or Gigabit Passive Optical Network. GPON technology for large-scale field deployment is not available commercially from any vendor, although several vendors are working towards an end-2005/early 2006 general availability. Per our industry checks, vendors closest to a solution are mainly startup companies - Optical Solutions and FlexLight. GPON is not currently supported by the FTTP product from Tellabs (AFC) - the sole supplier of the optical gear to Verizon. Tellabs' product supports Broadband PON (BPON) which is an ATM-based standard, consistent with Verizon's original RFP requirement. While Tellabs' current product is not capable of GPON, the company could chose to focus on GPON to protect the VZ account.

• GPON (IP-Based) Adoption Negatively Impacts Ciena's ATM Switches

• Verizon is currently using Ciena's ATM switch to aggregate the broadband ATM-based traffic in the FTTP network. The switch to IP services, however, could reduce demand for large ATM switches. While Ciena has positioned the ATM switch (DN platform, from WaveSmith acquisition) as a generic IP-switching engine, we believe the bulk of deployments are ATM-based, such as aggregation of DSL or wireless traffic.

• Partnerships Likely to Emerge

• We believe the smaller companies are ahead of larger vendors like Alcatel, Motorola, Tellabs (AFC) in the development of GPON-based products. Verizon's decision to move to GPON, plus potential interest from SBC, could motivate partnerships between large and small vendors since carriers are less likely to buy directly from the smaller vendors. Partnerships could range from a comprehensive OEM deal, to just collaboration on piece parts of the solution such as the optical line terminal (OLT) or optical network terminal (ONT). New players like Lucent and others could emerge.

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Spirent Distributed Abacus

Testing Goes Virtual

Spirent Communications announced availability of the Distributed Abacus IP Telephony Rollout Platform designed to assess and validate signaling performance and call quality in pre-production networks. The single system links distributed, live network test devices and enables IP and Hybrid IP/PSTN call quality assessment before a VoIP service launches. Think of this as a “virtual” test platform based on the Abacus 5000.
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Spirent’s Distributed Abacus IP telephony Rollout Platform provides network statistics such as jitter, delay and packet loss; call measurements statistics such as call setup time, percent of call completions, and call termination reason; and voice quality metrics such as MOS, PESQ and R value. Spirent’s Distributed Abacus can be used to test end-to-end or at any combination of IP and PSTN points on the network.

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CrystalVoice and HP

CrystalVoice Communications, Inc. announced it will bring enhanced VoIP Solutions to enterprise customers in the Asia Pacific region with HP. HP Taiwan will integrate CrystalVoice's Remote Extension and Click-to-Talk solutions for current and future clients throughout the region. HP Taiwan will provide design, implementation, and support to joint regional and global enterprise customers. HP Taiwan is a leading reseller and integrator of Cisco IP Telephony products in Taiwan.

What makes this release important is that CrystalVoice touts its ability to have great voice quality over dial-up. That is how they differentiate themselves in a crowded field. One would think HP would have done exhaustive testing before selecting the company to work with.

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TELETRUTH ALERT

I thought this worth passing on.

TELETRUTH ALERT --- March 9th, 2005

Teletruth, with New Networks Institute, Exposes the Bell Phone Company Skunkworks, Sock Puppets and Astroturf Groups that have Harmed the Public Interest --- (Phone companies: SBC, Verizon, BellSouth)

VISIT: http://www.newnetworks.com/skunkworks101.html

If you care about broadband, the Internet, Wi-Fi and wireless, municipalities wiring cities, the cost of phone service, VOIP, open access to content, or anything else related to your Digital Future, you need to read this.

Then check out the materials and take actions to call for investigations.
You've already been harmed.

WHAT'S BEHIND THE CURTAIN: There is an underground network of political deceit in the telecom and broadband industry. It is made up of very well funded fake or co-opted consumer groups, research firms, lobbying groups, politicians and PR firms throughout the United States, that are out to fool reporters, state legislatures, Congress, the public and the FCC that they represent the public interest.

In fact, many are controlled or have been co-opted through Sam Simon's Issue Dynamics and paid for by SBC, Verizon, BellSouth and the other phone and cable companies. The list of groups includes APT, TRAC, USIIA, Connect USA, New Millennium Research Council, League of United Latin American Citizens, and American Association of People With Disabilities, among others

It is also the co-opting of well known groups, from the Gray Panthers and NAACP, to the National Council of La Raza, the National Consumer League and others.

Call it skunkworks, (the phone companies' black-ops groups) call it astroturf, call it sock puppets, a consortium of groups -- run by Issue Dynamics, includes a host of non-profits directly funded by the Bell companies to wield undo influence --not in your favor. These groups are do the bidding of the Bell companies, not you.

And the impacts? They have helped to raise your phone rates, they've blocked fiber-optic and Wi-Fi initiatives in various states, they have helped to close down investigations of wrong doing by the phone companies, including audits of the companies showing customer overcharging and cooked books, and have helped to put competitors out of business.

The phone companies, through these groups, have also been able to shape or control new state laws or public service commission actions, as well as federal legislation and FCC actions.

They have, in essence, subverted the democratic process and stolen your right to be properly represented -- and you should resent it. And the sad part is that Washington insiders all know this is happening. It's common knowledge in the Beltway, and they have not stepped in to stop it.

Some examples:

1) Control of the FCC: Did you know that the FCC Consumer Advisory Committee is mainly comprised of phone, cable and broadcast interests.

In the last session, 1/3 of the members are from the industry or their associations. However, there were also 6 different groups tied to Sam Simon  and Issue Dynamics. This has helped to give the phone companies control of the consumer interests at the FCC. It is the reason phone bills are unreadable, or competitors are being put out of business or sold off.

March 8th, 2005, the FCC announced the new members of this Committtee. It
includes:

*       Alliance for Public Technology, Daniel Phythyon: is Senior Vice
President,
        Law and Policy at the United States Telecom Association ("USTA").
        APT is funded by Verizon and BellSouth and SBC APT is run by Sam
        Simon's Issue Dynamics. Other members, still on the Committee, also
         have ties to Sam Simon  and Issue Dynamics.
*       National Association of Broadcasters,Sprint Corporation,  Time
Warner,
        T-Mobile, Verizon, Nextel Communications, Inc., Cellular Telecommunications
        and Internet Association, and Consumer Electronics Association,

2) Raising Phone Rates: In 2000, the phone company coalition, known as the "CALLs Coalition", got over 40 consumer groups who agreed to raise the FCC Line Charge -- on every local phone bill in America --- from a cap of $3.50 to $6.50. Issue Dynamics helped to run a campaign to make consumer groups believe this increase was important and good for their constituents, claiming it would lower long phone rates. --- It didn't work for most Americans. Interestingly, almost all of the groups also got grants from the phone companies.

*     "Verizon has worked closely with the National Consumers League (NCL)
to
        create and update consumer web pages explaining common telecommunications
        charges." Sam Simon is the current Chairman of the National Consumer League.
        The NCL is on the FCC Consumer Advisory Committee.
*     Other groups backing this were NAACP, (an Issue Dynamics client and on
the
        APT board) the National Hispanic Council on Aging and American Association
        of People with Disabilities, both on the APT board. All three got grants and
        donations from the Bell companies.

The FCC, in 2005, is currently proposing to raise this charge to $10.00 --- and guess who they will listen to?

3) Wi-Fi and Municipalities -- Recently, Wi-Fi Network News and others have outlined how Issue Dynamics, APT and the New Millennium Research Council (a project of Issue Dynamics) have been issuing reports bashing municipalities ability to offer broadband and Wi-Fi Internet services. This data is being using in multiple states throughout the US to make state legislatures vote against competition. Go to the site to read more.

4) Harm to Competition and Broadband --- Questionable or co-opted consumer groups have helped to give exclusive rights for broadband networks to the phone companies -- SBC and Verizon. For example, American's For a Digital Divide in 2001, with APT, were supporters of the Bell broadband proposals that essentially harmed competitors. The group included:

*     World Institute on Disability, (Verizon's Foundation is a member and
Simon
        is on the board), American Association of People With Disabilities, (got
        "major donations from both Verizon and the Verizon Foundation, and put a
        Verizon VP on its own board") and the National Association of the Deaf, a
        Sam Simon/Issue Dynamics' client.

5) TRAC and APT, with the help of fake and co-opted groups and bad research, helped the phone companies enter the long distance markets, as well as harm competitors.

*     TRAC and APT helped Verizon and SBC enter the long distance market,
which
        helped to put AT&T and MCI up for sale -- they couldn't compete. Sam Simon
        is founder of TRAC, APT is run by Issue Dynamics. TRAC, a nonprofit, has
        been running at a suspicious loss for years.
*     Issue Dynamics got the Gray Panthers to go after MCI in a full page
        advertisement and staged fake rallies. They also enlisted the United Church
        of Christ for other attacks. APT and the United Church of Christ work
        together on projects including the "Everett C. Parker Ethics In
        Telecommunications Lectures" (stop laughing.)

6) VOIP and Universal Service Fund (USF) --- APT has helped to create the "Keep USF FAIR Coalition", with full page adds in USA Today, in February 2005. In 2004, APT created the VOIP Coalition (Voice over the Internet).
Both are filled with a mixture of the same players and their positions are related to the phone companies' needs. For example, instead of demanding an investigation into the problem-ridden Universal Service Fund, this group wants what's fair for the phone companies --- increase the USF, but leave it alone.

*     Groups signed onto these campaigns include: APT, American Association
of
       People with Disabilities, National Hispanic Council on Aging,
       Telecommunications for the Deaf, TRAC, and World Institute on Disability.

The list goes on and on. --- In some cases, these groups are merely fronts for the phone companies interests. In other cases, we believe they've been duped, co-opting authentic consumer groups for the phone companies'
purposes. However, in ALL cases, the outcome has been to not investigate the phone companies' behavior and sign on to Bell-friendly activities that ended up with higher phone rates, a national lack of fiber-based broadband, and harm to competition, as well as new threats to the Wi-Fi rollout, municipalities offering services, or new technologies, such as VOIP.

Let us be clear --- To date we have found no illegal acts. Also, many of these groups have done great activities for the public interest. And, we have no problem with non-profits taking money from a large corporation to fund a public interest activity. However, when these same groups vote and use their name to promote the activities of the large corporation, especially when they do not fully disclose the money received or fail to first consider the needs of their own constituency, then the country should be outraged and these activities investigated. While many groups will counter that the phone companies only represent a percentage of their income, it is now clear that it represents100% of their favoritism on telecommunications and broadband issues. Should they have nonprofit status?

Are they doing illegal-unethical acts?

TAKE ACTION:

A) Go to http://www.newnetworks.com/skunkworks101.html and learn more -- Don't take our word for it. We've put links to articles and documents by others, including TRAC's IRS financials, ties between groups, etc.

TAKE ACTION: http://www.newnetworks.com/takethefccback.html

B) Join us in our Complaint to Congress to investigate the FCC Consumer Advisory Committee's board members. Read the government's report questioning the FCC's Committee process. --- The new Committee, announced March 8th,
2005
is still filled with phone companies and astro-turfers.

C) Complain about nonprofit status and co-mingling of funds for questionable
groups: Why are fake groups, research firms, etc. getting a free ride as 501c3, nonprofit groups? Billions of dollars are at stake. Read the IRS information about restrictions on lobbying.

D) Call for investigations of this problem --- This same scam is happening in other industries as well, from the fake environmental groups set up by the oil companies, to the astroturf groups designed to torpedo health care reform. Read what others have been writing on this.

Bruce Kushnick, Teletruth, bruce@teletruth.org Tom Allibone, Teletruth, tom@teletruth.org

PS: Teletruth was a member of the FCC Consumer Advisory Committee in 2003-2004. We were not invited back in 2005.

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iPOD Phone

A Motorola exec told me about the new iPOD phone at ITEXPO a few weeks back. I thought it was common knowledge. It seems that there is new buzz on the Internet about the partnership between Motorola and Apple. Rumor has it the phones will be limited in the number of songs they can play. This makes sense from the standpoint of protecting iPOD sales.

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